Friday, November 14, 2014

(The Big Disrupt) Tesla Motors: The Empire Strikes Back... Again

Tesla Motors has many obstacles in the way in making the electric car ubiquitous and actually selling them but auto dealers using their pull with state legislators is one obstacle they're not going to get around anytime soon. Auto dealers, dead set against Tesla Motors plans to sell their cars directly to customers, once again showed just how much clout they have at state level across the country as Michigan governor Rick Snyder signed off on a bill that prohibits carmakers, never mind Tesla, from selling their cars directly to consumers.

While Snyder maintained that the bill reflected existing law, it clearly was a signal that Tesla wasn't about disrupt the auto dealer system in Michigan or other companies in the home state of the big three. So far, Tesla Motors, like many innovative companies, has found itself outfoxed and out-muscled against entrenched interests with political connections that run deep but with the announcement that the company was going to build a $5bn in Nevada, it seems like electric car manufacturer is learning how to play the game.

Uber, who have made waves aggressively disrupting the taxi and private hire cab worldwide, has run into the same problem but with it's hiring of Obama former campaign manager David Plouffe, the car hailing outfit has realized that ushering a new product or service that renders old or existing models obsolete is a political as well as technical feat.

While getting outmaneuvered by auto dealers in a number of states sucks, things haven't been all bad for the company as while competitors Daimler AG and Toyota sold their shares in the electric vehicle manufacturer, Daimler AG sold their shares out of fear of Tesla's Model S which could serve as stiff competition to the German carmakers luxury models.

However the real problem confronting is not auto dealers and state legislators but just how it can meet its demand or even if there is enough demand in the first place. So far, Tesla hasn't made much effort marketing or advertising it wares which makes the company's growth and profile in the media quite a feat. Analyst have pointed out this lack of push might hurt its demand but Tesla Motors CEO Elon Musk has wisely fixed his focus on making sure they can produce enough cars to meet demand rather than get into the tough spot of stoking up demand for their cars and not having the machine in place to meet it.

In sum, it sucks that Tesla is getting outmaneuvered by auto dealers fighting to stay in business in the long run, the company looks like its in a good place as it has a great product and as soon they figure out how to make their cars cheaper, Tesla, and more importantly, the electric car, will finally get its due.